F35

Adrian Wyld/The Canadian Press

A F-35 Joint Strike Fighter is seen in the hangar waiting for an announcement by Defence Minister Peter MacKay in Ottawa on July 16, 2010. Ottawa was awash in speculation Thursday that the pricetag for the life-time cost of the oft-maligned F-35 fighter was about to take a huge jump.

OTTAWA – The federal government is going back to the drawing board in its search for a new fighter jet as it prepares to release a dramatically higher cost estimate to purchase and operate the F-35.

And that means the sophisticated Lockheed Martin fighter jet, built to evade radar, perform sky-high duels and pummel ground targets, could ultimately be downed by a case of sticker shock.

The single-engine fighter had been the plane of choice for the Royal Canadian Air Force until it flew into a storm of turbulence, caused by delays in the jet’s development and a rising price tag.

The final straw was the spring report from Auditor General Michael Ferguson, who accused the defence department of not accurately informing politicians of the jet’s cost. He said the total cost would be $25 billion, including $10 billion to operate the jets over 20 years, a cost that was never reported to the public.

And now politicians and bureaucrats are bracing for more criticism with the release of a new report from the accounting firm KPMG that is expected to peg the cost of buying and operating the jet as high as $40 billion, according to media reports.

A senior government official said that figure was still speculative but confirmed the revised price tag will be much higher than Canadians have been told so far.

However the official cautioned that part of the higher figure is because KMPG has tallied the costs of operating the jets over 42 years, rather than 20 years as done by the defence department. As well, the new figures add everything into the cost — the purchase, maintenance, as well as fuel and salaries of the personnel needed to maintain and fly it.

Still, the cost promises to be jarring and will add impetus for the government to look at other fighters on the market.

Public Works Minister Rona Ambrose, who has headed the file since spring, said Wednesday the government has pushed “reset” on the acquisition process.

“We have set up a secretariat to do the due diligence necessary and do a full options analysis before we spend any funds on replacing the CF-18s,” Ambrose said.

But Andrew MacDougall, director of communication for Prime Minister Stephen Harper, denied Thursday night that the F-35 program was dead.

“Cabinet has not taken a decision on the F-35. The Government will fulfill its seven point plan,” MacDougall said on Twitter, referring to the review of the fighter jet purchase being led by Public Works.

A source said that the F-35 is not out of the running and will be a contender as the government considers alternatives. But it could mean that Ottawa ultimately buys fewer F-35s than the 65 planes it had originally planned on getting.

Another contentious point promises to be the so-called industrial regional benefits, the business that Canadian companies could expect to reap from the jet deal. In the new competition, the bidding consortiums can expect to be pressed hard to deliver even more benefits to Canadian companies than was promised by the F-35 deal.

DEMANDS MACKAY RESIGN

The opposition parties are demanding that Defence Minister Peter MacKay resign over the skyrocketing cost of the F-35 fighter jet program.

Liberal MP John McKay says the defence minister should quit for previously insisting that the F-35 was the only plane the Canadian air force should buy.

New Democrat MP Jack Harris also called on the government to immediately release the KPMG report.